The number of corporate-backed deals in June stood at 211, up from 173 funding rounds in the same month last year. Investment value, however, dropped by 53% compared with last year – to $6.34bn from $13.64bn. The deal count in June was up slightly in comparison with the previous month this year (201 rounds).
June’s deal count also compares favourably with most other months this year, except March when GCV Analytics recorded 214 transactions. However, total capital invested in corporate-backed rounds in June declined, down from $9.27bn in May, representing a 31% decrease. June, however, was the month with the largest number of rounds in the second quarter this year.
The US came first in the number of venturing deals with corporate backing, hosting 122 rounds – slightly more than half the disclosed dealflow – while China was second with 21 rounds and India third with 10.
The leading corporate investors by number of deals were diversified conglomerate Alphabet, industrial conglomerate General Electric, cloud computing service provider Salesforce and internet company Tencent. Alphabet and Tencent were involved in the biggest rounds.
Deals
The most active corporate investors came from the IT, financial services, industrial and media sectors.
GCV Analytics data shows that emerging businesses from the IT, health, media and financial sectors secured the highest number of deals involving corporate venturers. The top deals by round size were not concentrated in any particular sector, however. They ranged from transport and services through consumer and media to health and fintech companies.
US-based health intelligence provider Outcome Health raised $600m from a consortium that included CapitalG, the growth-stage corporate venturing division of Alphabet. Goldman Sachs Investment Partners, Leerink Transformation Partners, Pritzker Group Venture Capital, Balyasny Asset Management and unnamed health systems and healthcare stakeholders also contributed to the round. Founded in 2006, Outcome Health has developed a platform to deliver health information and intelligence during critical moments of care to help both medical professionals and patients to make better decisions.
Tencent led a $600m round for China-based bicycle-rental platform Mobike that included financial services firm Bocom International and ICBC International. Mobike operates an app-based bike-rental service initially launched last year in Shanghai but now expanding rapidly. The company has been launched in 100 cities so far this year, including Singapore and some in the UK.
Houzz, a US-based home improvement services platform backed by mass media company Comcast, was reported to be about to close a round of almost $400m. Multi-family office Iconiq Capital is leading the round, which includes an undisclosed strategic investor along with existing investors GGV Capital and Sequoia Capital. The deal values the company at about $4bn. Houzz runs an online marketplace where users can browse millions of photos to get design ideas, hire home improvement professionals and buy products for their homes.
E-commerce firm JD.com invested $397m in UK-based luxury online fashion seller Farfetch as part of a strategic partnership. JD.com will supply Farfetch with marketing, logistics and technology assistance to help it become established in China, where it already partners about 200 luxury brands and more than 500 retailers. Farfetch operates an e-commerce platform that sells goods supplied by more than 700 luxury brands, and it has also developed an e-commerce technology product as well as in-store retail technology for bricks-and-mortar fashion sellers.
China-based electric vehicle developer Xiaopeng Motors raised RMB2.2bn ($324m) in a series B round led by on-demand chauffeured travel platform UCar. Founded in 2014, Xiaopeng is working on an all-electric sports utility vehicle, Xpeng, that can be mass produced relatively quickly, and is looking to begin commercial manufacturing later in 2017.
Essential, a US-based mobile electronics product developer with internet group Tencent and contract electronics manufacturer Foxconn as backers, raised $300m from undisclosed investors. The round valued Essential at between $900m and $1bn. Essential’s lead product is a smartphone with features such as a strong titanium casing and what it claims is the world’s smallest 360-degree personal camera.
Payment services firm Mastercard invested in US-based payment services automation software provider AvidXchange as part of a $300m financing round. Mastercard’s participation in the round came alongside the signing of a strategic partnership agreement that will involve the distribution of AvidXchange’s end-to-end accounts payable and payment automation software to small and mid-size businesses through the former’s B2B Hub. Founded in 2000, AvidXchange supplies technology that automates invoice and payment processes for some 5,500 corporate clients operating in industries such as financial services, real estate, energy and construction.
View, a US-based advanced glass producer with industrial product maker General Electric and glass and ceramics producer Corning as investors, closed a series G round of over $200m. The round was led by $70m from funds and accounts managed by investment manager BlackRock and included undisclosed existing backers. Formerly known as Soladigm, View supplies electrochromic glass that be tinted based on the level of external light.
China-based brokerage firm Futu Securities raised $145.5m in series C funding from a consortium led by internet company Tencent. Venture capital firms Matrix Partners China and Sequoia Capital China also took part in the round, which valued the company at more than $1bn according to Futu founder Li Hua, though he did not reveal its precise valuation. Founded in 2012, Futu Securities operates an online stock trading platform that allows users to invest in US and Hong Kong-listed companies. The company claims to have served more than 3.4 million investors and processed a combined $73bn worth of transactions.
China-based online steel transaction platform Ouyeel collected $140m in funding from investors including conglomerate Mitsui & Co. The round was also backed by steel companies Jiangsu Shagang, Benxi Steel Group and Shougang, through its unit Beijing Shougang Fund Investment Company, as well as logistics services provider Global Logistic Properties and financial services firm CCB Trust. Ouyeel, founded in 2015 by steel company China Baowu Steel Group, operates a platform that offers steel industry-related services, such as transactions, logistics and storage, industry news, processing, investment and funding, and financial products.
Exits
In June GCV Analytics tracked only seven exits involving corporate venturers as either acquirers or exiting investors. This figure is a considerable drop from the 18 reported in the same month a year ago. The transactions – most of which took place in the US – included four acquisitions, three initial public offerings and one merger.
It is also a decrease from the 21 transactions tracked in May this year. Total estimated exited capital in June amounted to $416m, slightly over one-fifth of the estimated $1.86bn from May.
Big box retailer Walmart is reported to be looking to acquire US-based men’s fashion e-commerce company Bonobos in a deal that would provide retail chains Nordstrom and Coppel with an exit. Walmart is expected to pay about $300m for Bonobos, a source told Bloomberg, adding that talks between the companies were in the final stages. Apparel company Bonobos specialised in chinos when it was founded in 2007 but has since expanded its range to include suits, shirts, shorts and golfing apparel.
Mersana Therapeutics, a US-based antibody drug conjugate (ADC) developer backed by pharmaceutical companies Takeda and Pfizer, raised $75m in an IPO. The company issued 5 million shares on the Nasdaq Global Select Market at $15 each, in the middle of the $14 to $16 range set earlier. Mersana develops cancer treatments using an ADC platform that allow much higher payloads of drugs to be delivered by increasing tolerability.
Communications technology producer Motorola Solutions exited US-based gunfire detection and analysis technology producer Shotspotter in a $30.8m IPO on Nasdaq. Shotspotter issued 2.8 million shares at $11 each. Shotspotter provides gunshot detection and location technology to law enforcement and security services through a software-based subscription model. The system combines cloud software with internet-connected sensors and communication networks.
US-based cancer diagnostics provider Grail agreed to merge with China-based cancer testing technology developer Cirina. Launched by Illumina in January 2016, Grail is working on technology that combines high-intensity sequencing, population-scale clinical testing and data science technology to detect cancer earlier. Founded in 2014, Cirina is developing blood-plasma tests to detect a range of diseases.
Wanderful Media, a US-based deal-finding platform backed by a host of media companies, was acquired by advertising technology producer OwnLocal for an undisclosed sum. Founded in 2011, the company operates a platform called Find&Save that allows users to browse deals and coupons from local newspapers, retailers and other sources through Wanderful’s website and app. The company’s shareholders were Advance Digital, AH Belo, Community Newspaper Holdings, Cox Media, EW Scripps, Gannett, GateHouse Media, Graham Holdings, Hearst, Lee Enterprises, MediaNews and McClatchy.
TrustYou, a Germany-based consumer feedback platform operator backed by publishing conglomerate Ganske Verlagsgruppe, was acquired by human resources company Recruit for an undisclosed amount. Established in 2008, TrustYou operates a platform that enables hotels to gain feedback from their visitors. The company processes approximately 100 million reviews a year for thousands of hotels – both chain-owned and independent – across the world.
Wedding advertising platform BrideClick acquired the assets of Mode Media, a bankrupt US-based lifestyle media company backed by media group Hubert Burda. Mode operated a media platform and marketing network, and had raised more than $220m in funding from investors including Hubert Burda and Mizuho Capital, the venture capital arm of financial services firm Mizuho Bank, as well as a string of VC firms.
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press
